(1) The definitions in this subsection apply throughout this
section unless the context clearly requires otherwise.
(a) "Claims" means the cost to the insurer of health care
services, as defined in RCW 48.43.005, provided to a policyholder
or paid to or on behalf of the policyholder in accordance with
the terms of a health benefit plan, as defined in RCW 48.43.005.
This includes capitation payments or other similar payments made
to providers for the purpose of paying for health care services
for a policyholder.
(b) "Claims reserves" means: (i) The liability for claims
which have been reported but not paid; (ii) the liability for
claims which have not been reported but which may reasonably be
expected; (iii) active life reserves; and (iv) additional claims
reserves whether for a specific liability purpose or not.
(c) "Declination rate" for an insurer means the percentage
of the total number of applicants for individual health benefit
plans received by that insurer in the aggregate in the applicable
year which are not accepted for enrollment by that insurer based
on the results of the standard health questionnaire administered
pursuant to RCW 48.43.018(2)(a).
(d) "Earned premiums" means premiums, as defined in RCW 48.43.005, plus any rate credits or recoupments less any refunds,
for the applicable period, whether received before, during, or
after the applicable period.
(e) "Incurred claims expense" means claims paid during the
applicable period plus any increase, or less any decrease, in the
claims reserves.
(f) "Loss ratio" means incurred claims expense as a
percentage of earned premiums.
(g) "Reserves" means: (i) Active life reserves; and (ii)
additional reserves whether for a specific liability purpose or
not.
(2) An insurer must file supporting documentation of its
method of determining the rates charged for its individual health
benefit plans. At a minimum, the insurer must provide the
following supporting documentation:
(a) A description of the insurer's rate-making methodology;
(b) An actuarially determined estimate of incurred claims
which includes the experience data, assumptions, and
justifications of the insurer's projection;
(c) The percentage of premium attributable in aggregate for
nonclaims expenses used to determine the adjusted community rates
charged; and
(d) A certification by a member of the American academy of
actuaries, or other person approved by the commissioner, that the
adjusted community rate charged can be reasonably expected to
result in a loss ratio that meets or exceeds the loss ratio
standard of seventy-four percent, minus the premium tax rate
applicable to the insurer's individual health benefit plans under
RCW 48.14.020.
(3) By the last day of May each year any insurer issuing or
renewing individual health benefit plans in this state during the
preceding calendar year shall file for review by the commissioner
supporting documentation of its actual loss ratio and its actual
declination rate for its individual health benefit plans offered
or renewed in the state in aggregate for the preceding calendar
year. The filing shall include aggregate earned premiums,
aggregate incurred claims, and a certification by a member of the
American academy of actuaries, or other person approved by the
commissioner, that the actual loss ratio has been calculated in
accordance with accepted actuarial principles.
(a) At the expiration of a thirty-day period beginning with
the date the filing is received by the commissioner, the filing
shall be deemed approved unless prior thereto the commissioner
contests the calculation of the actual loss ratio.
(b) If the commissioner contests the calculation of the
actual loss ratio, the commissioner shall state in writing the
grounds for contesting the calculation to the insurer.
(c) Any dispute regarding the calculation of the actual loss
ratio shall, upon written demand of either the commissioner or
the insurer, be submitted to hearing under chapters 48.04 and 34.05 RCW.
(4) If the actual loss ratio for the preceding calendar year
is less than the loss ratio established in subsection (5) of this
section, a remittance is due and the following shall apply:
(a) The insurer shall calculate a percentage of premium to
be remitted to the Washington state health insurance pool by
subtracting the actual loss ratio for the preceding year from the
loss ratio established in subsection (5) of this section.
(b) The remittance to the Washington state health insurance
pool is the percentage calculated in (a) of this subsection,
multiplied by the premium earned from each enrollee in the
previous calendar year. Interest shall be added to the
remittance due at a five percent annual rate calculated from the
end of the calendar year for which the remittance is due to the
date the remittance is made.
(c) All remittances shall be aggregated and such amounts
shall be remitted to the Washington state high risk pool to be
used as directed by the pool board of directors.
(d) Any remittance required to be issued under this section
shall be issued within thirty days after the actual loss ratio is
deemed approved under subsection (3)(a) of this section or the
determination by an administrative law judge under subsection
(3)(c) of this section.
(5) The loss ratio applicable to this section shall be the
percentage set forth in the following schedule that correlates to
the insurer's actual declination rate in the preceding year,
minus the premium tax rate applicable to the insurer's individual
health benefit plans under RCW 48.14.020.
| Actual Declination Rate | Loss Ratio |
| Under Six Percent (6%) | Seventy-Four Percent (74%) |
| Six Percent (6%) or more (but less than Seven Percent) | Seventy-Five Percent (75%) |
| Seven Percent (7%) or more (but less than Eight Percent) | Seventy-Six Percent (76%) |
| Eight Percent (8%) or more | Seventy-Seven Percent (77%) |
[2008 c 303 § 4; 2003 c 248 § 8; 2001 c 196 § 1; 2000 c 79 § 3.]
NOTES:
Effective date -- 2001 c 196: "This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately [May 7, 2001]." [2001 c 196 § 14.]
Effective date -- Severability -- 2000 c 79: See notes following RCW 48.04.010.